House passes bill hiking VA mortgage refi fees

The proposal offsets expanded VA home loan benefits by raising the VA refinance fee from 0.5% to 1.42% and increasing the assumption fee from 0.5% to 1%. It also extends current funding fee rates for non-disabled veterans and adds modest monthly costs for some borrowers. The VA refinance fee is optional and applies only to veterans who choose to lower their interest rates. Disabled veterans are exempt from the extra fees, and the changes do not affect their ability to use the program. Common Defense criticized the bill, saying it nearly triples the IRRRL program fee to about 1.4% and increases the average veteran’s lifetime cost by more than $8,000. The bill received support from 20 veteran service organizations and many Republicans, while more than 150 Democrats voted against it.

"To offset the costs of the expanded benefits, the proposal raises the VA refinance fee from 0.5% to 1.42%, increases the assumption fee from 0.5% to 1%, and extends current funding fee rates for non-disabled veterans while adding modest monthly costs for some borrowers. Lawmakers noted that the VA refinance fee is optional, meaning it only applies to veterans who choose to lower their interest rates. Disabled veterans are exempt from the extra fees, and the changes will not affect their ability to use the program."

"Common Defense, a national organization for veterans and military families, condemned the bill's passage. The group stated that the legislation nearly triples the Interest Rate Reduction Refinance Loan (IRRRL) program fee to 1.4% and costs the average veteran more than $8,000 over the life of the loan. While the group supports expanding benefits for Gold Star families and severely disabled veterans, it argued that Congress should not force one group of veterans to bear the cost of supporting another."

"Changing the rules of the VA home loan program to make refinancing more expensive for financially strained veterans does real harm to military families, Naveed Shah, political director of Common Defense, said in a statement. The original plan would have raised VA home purchase loan fees to help fund the expanded benefits. But lawmakers revised the terms weeks after mortgage trade groups expressed concerns about the initial draft."

"Ultimately, 20 veteran service organizations and stakeholders supported the bill, which saw massive backing from Republicans. More than 150 Democrats voted against it."

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